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by Herman Manson (@marklives) M&C Saatchi is preparing to launch a new Africa agency. The venture, provisionally called M&C Saatchi Abel Africa, will see new affiliate offices launched or acquired in Nigeria and Kenya.

The London based M&C Saatchi group will then have an on the ground precise in East, West and Southern Africa. It already has offices in Cape M&C SaatchiTown and Johannesburg through M&C Saatchi Abel.

Moray MacLennan, worldwide chief executive of M&C Saatchi, revealed that the new agency will be driven from the M&C Saatchi Abel office in  Cape Town, which is in the process of recruiting an executive to lead the initiative.

The South African business is the fastest growing in the M&C Saatchi network and has grown from a staff component of 63 at his last visit to South Africa in August 2011 to over 150 today. Revenue (note: not billings) has passed the R80 million mark and its been winning business including Edgars Department Stores and Nedbank’s below-the-line account.

MacLennan says the local agency has been more successful than expected. It made a loss in its first year, turned a small profit in 2011 and is expected to do well in 2012. While margins are still substantially lower than in the European business he expects it will keep building to around 15%. Fast growth often translates into the use of more freelancers at a greater cost than permanent staff which impacts negatively on margins, says MacLennan.

In its Interim Results for the six months ended 30 June 2012 the group reported like-for-like revenues up 146% to £2.8m in the ME and Africa region and a profit of £330k.

On animosity by parts of the local industry aimed at the South African agency MacLennan shrugs and says M&C Saatchi used to be booed in London – its means you are making an impact and scaring the competition.

The launch of the Africa agency underscores the continents high growth market status as Europe lurches from crises to crises. Although M&C Saatchi usually prefers to launch start-up offices and grow them organically it will fast-track the Africa business through affiliates and acquisitions. “We are sitting on cash we can invest and we have no debt,” says MacLennan.

MacLennan adds that he wasn’t looking to “buy somebody who wanted to sell” but would rather buy an agency who wanted to join his network and grow within it. M&C Saatchi will investigate the market in East and West Africa over the next 3-4 months and the new agency should open its doors before the end of next year.

The M&C Saatchi network has made good progress over the past year. M&C Saatchi follows a strategy focused on organic growth and aims to only operate in key markets or regions. MacLennan says the office opened in Milan 18 months is doing exceptionally well.

Over the last 12 months the group has also opened an office in Abu Dhabi off the back of its win of the Etihad account as well as in Singapore. The New York office was upgraded to a proper agency with a new executive team under Jeff Brooks. The lack of a substantial presence there was long considered an Achilles heel by industry watchers.

A new office is also being opened in Europe today (Nov 27). At the time of publication its location was still embargoed but it has been on the cards for some time and MacLennan referred to it on his previous visit to South Africa. The new agency will service the Nordic region which MacLennan describes as the 10th biggest market in the world. It will also give the agency access to one of the highest concentration of digital experts in the world. It takes the total number of offices in the M&C Saatchi network to 27.

MacLennan continues to look at opportunities in Indonesia, Mexico and Eastern Europe.

Apart from new offices M&C Saatchi is rolling out successful agencies in sectors such as PR, mobile, CRM and sponsorships throughout its network (it has already launched M&C Saatchi Abel Mobile and M&C Saatchi Sport & Entertainment in South Africa).

MacLennan will also focus on attracting global business in the year ahead to benefit the broader network. M&C Saatchi recently won the global advertising business for Ballantine’s – the world’s No. 2 Scotch whisky.

MacLennan says real growth opportunities exist in Australia, Africa, the Middle East and Asia (the network is beefing up its investment in China and India).

While thousands of staff and massive agency networks used to make clients feel secure times have changed and legacy issues and a brain drain of top talent to the marketing industry or start-up agencies means many clients have lost faith in how the massive networks do business, says MacLennan. A more nimble and entrepreneurial M&C Saatchi is well positioned to take up the slack.

MacLennan describes the M&C Saatchi agency structure as one with central thinking and specialist execution. All the subsidiary agencies (like mobile, sport & entertainments etc.) sit in the same building as the mother agency and all the different agency strategists also sit together. MacLennan says the agency is strategising to what extent it needs to combine the creative departments of the various agencies – he has on opinion but wasn’t prepared to share it until he had discussed it further internally. He did hint that in the future creative functions of the various agencies might well be sitting in the same room as well.

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Published by Herman Manson

MarkLives.com is edited by Herman Manson. Follow us on Twitter - http://twitter.com/marklives

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